Winning the ’20s
THE COMPANY
OF THE FUTURE
By Allison Bailey, Martin Reeves, Kevin Whitaker, and Rich Hutchinson
I n the coming decade, companies will
increasingly need to compete on the rate
of learning. Technology promises to play a
critical role: artificial intelligence can
detect patterns in complex data sets at
extreme speed and scale, enabling dynamic
learning. This will allow organizations to
constantly adapt to changing realities and
surface new opportunities, which will be
increasingly important in an uncertain and
fast-changing environment.
But for companies to compete on learning,
it is not enough merely to adopt AI, which
alone can accelerate learning only in indi-
vidual activities. As with previous transfor-
mative technologies, unlocking the full po-
tential of AI — and of humans — will require
fundamental organizational innovation.¹ In
other words, to win the ’20s, leaders will
need to re-invent the enterprise as a
next-generation learning organization.
Reimagine the Organization
The next-generation learning organization
will need to be redesigned to fulfill several
key functions: (See Exhibit 1.)
•• Learning on All Timescales. The
growing opportunity and need to learn
on faster timescales, driven by techno-
logical innovation, is well known —algo-
rithmic trading, dynamic pricing, and
real-time customized product recom-
mendations are already a reality in
many businesses. But it is perhaps
under-appreciated that slow-moving
forces are also becoming more import-
ant. For example, trade institutions,
political structures, wealth stratification,
and social attitudes are slowly changing
in ways that could have a profound
impact on business. Gone are the days
when business leaders could focus only
on business and treat these broader
variables as constants or stable trends.
But such shifts unfold over many years
or even decades. In order to thrive
sustainably, businesses must learn on
all timescales simultaneously.
•• Combining Humans and Machines
Optimally. Machines have been crucial
components of businesses for centu-
ries — but in the AI age, they will likely
 Exhibit 1 | The Next-Generation Learning Organization
Source: BCG Henderson Institute.
expand rapidly into what has traditional-
ly been considered white-collar work.
Instead of merely executing human-
directed and human-designed processes,
machines will be able to learn and adapt,
and will therefore have a greatly expand-
ed role in future organizations. Humans
will still be indispensable, but their duties
will be quite different when complement-
ed or substituted by intelligent machines.
•• Integrating Economic Activity
Beyond Corporate Boundaries.
Businesses are increasingly acting in
multicompany ecosystems that incorpo-
rate a wide variety of players. Indeed,
seven of the world’s largest companies,
and many of the most profitable ones,
are now platform businesses. Ecosystems
greatly expand learning potential: they
provide access to exponentially more
data, they enable rapid experimentation,
and they connect with larger networks
of suppliers of customers. Harnessing
this potential requires redrawing the
boundaries of the enterprise and
effectively influencing economic activity
beyond the orchestrating company.
•• Evolving the Organization Continu-
ously. The need for dynamic learning
Boston Consulting Group • BCG Henderson Institute
does not apply just to customer-facing
functions — it also extends to the
inner workings of the enterprise.
To take advantage of new information
and to compete in dynamic, uncertain
environments, the organizational
context itself needs to be evolvable
in the face of changing external
conditions.
Today’s organizations, which were
designed for more stable business environ-
ments, are not well-suited to perform
these functions. Reinventing the organiza-
tion for the next decade will require
embracing five imperatives: (See
Exhibit 2.)
1. Integrate technologies for seamless
learning.
2. Migrate human cognition to new,
higher-level activities.
3. Redesign the relationship between
machines and humans.
4. Nurture broader ecosystems.
5. Rethink management and leadership
accordingly.
2
 Exhibit 2 | Five Imperatives for the Company of the Future
Source: BCG Henderson Institute.
Integrate Technologies for
Seamless Learning
As powerful as today’s emerging technolo-
gies are, they will yield only incremental
gains if they simply enhance individual
steps of existing processes. The effective
rate of an organization’s learning is gated
by its ability to act on new insights. And
classical organizations act slowly, owing to
their reliance on human decision making
and hierarchy.
In order to truly accelerate the speed of
learning to algorithmic timescales, organi-
zations will need not only to automate but
also to “autonomize” significant parts of
their businesses. In traditional automation,
machines execute a predesigned process re-
peatedly and consistently. In autonomiza-
tion, machines use continuous feedback to
act, learn, and adapt on their own — with-
out the bottleneck of human intervention.
Autonomous systems are designed by com-
bining multiple technologies into integrated
learning loops. Data from digital platforms
automatically flows into AI algorithms,
which mine the information in real time to
facilitate new insights and decisions. These
are wired directly into action systems,
which continuously optimize outcomes un-
der changing conditions. These actions pro-
duce yet more data that can be fed back
Boston Consulting Group • BCG Henderson Institute
through the cycle, closing the loop and al-
lowing the organization to learn at the
speed of algorithms.
Some organizations are already imple-
menting autonomous learning systems. For
example, Amazon’s pricing and product
recommendation engines, among dozens of
other functions, are operated by AI systems
that learn and adapt as new information
emerges. And these systems are intercon-
nected, so new data or insights from one
part of the business cascade through all
other functions, which react accordingly.2
In contrast, traditional organizational ap-
proaches — for example, unchanging rules
or hierarchical decision processes — can im-
pede companies’ ability to harness the rap-
id learning potential unlocked by technolo-
gy. As BCG’s research on Smart Simplicity
has shown, today’s organizations already
face the need to reduce bureaucracy and
complicatedness in order to promote fluid
collaboration. With the introduction of AI
and other new technologies, leaders need
to redouble their efforts to simplify their
organizations in order to enable autono-
mous learning as well as more effective
human-to-human collaboration.
Actions that companies can take to harness
autonomous learning include:
3
•• Gather real-time data on all aspects of
the business by leveraging platforms,
the Internet of Things, and other new
technologies.
•• Deploy AI at scale, integrated with data
and decision-making systems.
•• Take human hierarchy “out of the loop”
of routine, data-based decision making.
Migrate Human Cognition to
New, Higher-Level Activities
The widespread adoption of autonomous
learning machines naturally raises the
question of what role human workers will
play in the organization of the future. To-
day, there is already widespread concern
about the speed at which technology will
disrupt the future of work. To shape this
future — and to maximize organizational
learning capabilities — businesses need to
focus human cognition on its unique
strengths.
For all its power and potential, AI is still in-
herently limited in its cognitive scope. It
can analyze correlations in data (“what is
the case”) at extreme speed, on extreme
scales, with extreme complexity. But it can-
not reason at higher levels, such as causal
inference (“why is it the case”) or counter-
factual thinking (“what is not the case but
could be”).3
Humans should increasingly focus their ef-
forts on these higher-level activities. For ex-
ample, while correlative analysis is general-
ly sufficient for learning about repeated
actions on fast timescales, it is less useful
for learning about slow-moving forces, such
as political, social, and economic trends.
These shifts are unique and depend on the
historical context and trajectory, which
means there is no repeated data set in
which to find patterns. Human abilities,
such as understanding causal relationships
and generalizing from limited data, are
necessary to decode these forces and adapt
the organization accordingly.
Counterfactual thinking is also critical, as
businesses need increasingly to compete
on imagination. Existing business models
Boston Consulting Group • BCG Henderson Institute
are being exhausted faster, and long-term
growth is declining, which means compa-
nies must continually generate new ideas
to grow sustainably. But businesses today,
which are often implicitly designed for effi-
ciency and the maximization of short-run
financial outcomes, are not conducive to
imagination. Organizations will need to
better facilitate individual and collective
imagination.
Apple provides a prescient example. When
Steve Jobs returned to Apple as CEO in
1997, he made design the core of the com-
pany’s culture, instead of functions like en-
gineering and finance, which had previous-
ly been dominant. By focusing on
design — which leverages human creativity
and imagination to generate new
ideas — Apple was able to produce the nov-
el products, including the iPhone, that
eventually helped it become the world’s
most valuable company.
In addition to imagination and making
sense of non-repeated events, there will be
many activities where humans are advan-
taged, including organizational design, al-
gorithmic governance, ethics, and purpose,
to name a few. In these domains of human
activity, organizations will need to become
more effective at dynamic collaboration to
get the most out of their teams. This re-
quires emphasizing self-organization and
experimentation by creating an organiza-
tional context in which responsive decision
making and learning can thrive, rather
than by relying on direct instructions.
Finally, organizations will need to recog-
nize that these new activities are cognitive-
ly demanding — which is particularly chal-
lenging in an age of exploding inboxes,
endless meetings, and ubiquitous informa-
tion. Organizations will have to allow hu-
mans to cultivate the art of reflection and
avoid cognitive overload.
How can organizations help humans maxi-
mize their value?
•• Expose employees to unfamiliar or
anomalous information, in order to
inspire imagination.
4
•• Schedule and protect time for unstruc-
tured reflection.
•• Promote new ways of working that
enable dynamic learning and adapta-
tion.
Reconceive the Relationship
Between Humans and Machines ••
The first two imperatives call for a hybrid
learning organization, one that combines
the comparative advantages of machines
and humans: machines’ ability to rapidly
identify complex patterns in big data and
humans’ ability to decode complex causal
relationships and imagine new possibili-
ties. Together, these will enable the organi-
zation to learn on an expanded range of
timescales — faster and slower.
But in hybrid organizations, humans and
machines will increasingly have to collabo-
rate in new and more effective ways. This
includes tasks that require thinking on mul-
tiple levels or timescales simultaneously, as
well as tasks that demand social interac-
tion, another dimension in which humans
are currently far more effective. Organiza-
tions will thus need to reimagine the rela-
tionship between humans and machines to
bring the best out of both and maximize
synergies.
Different types of jobs and tasks will re-
quire different types of human-AI relation-
ships:4
•• In jobs that are based predominantly
on optimization or pattern recognition,
especially at high velocity and scale,
humans will likely be substituted by
machines. For example, many tasks
done today by retail loan underwriters
can be performed by AI; in these cases,
humans will need to shift their focus to
new higher-level tasks to add value.
•• In jobs that also require social interac-
tion, machines may take over optimiza-
tion-related aspects, but a “human
layer” will still be critical to deliver
messages with empathy and
compassion. For example, MIT
developed a robot to match nurses with
Boston Consulting Group • BCG Henderson Institute
patients and allocate scarce resources
in maternity wards, based on patient
histories, scheduling constraints, and
previous experience.5 As a result, nurses
and doctors can spend more time
interacting with patients directly to
provide empathy and personalized care.
In jobs that require more creativity than
optimization, humans will likely be
complemented by intelligent machines
that augment the capacity for creativity
and imagination. For example, Maurice
Conti, an expert in innovation and
technology, describes “generative
design tools” that automatically create
new possibilities based on a set of
predefined parameters, which can spark
new ideas for human designers.
•• Finally, in jobs that require both creativi-
ty and social interaction, humans will
have many of the same core responsibili-
ties that they do today, but targeted AI
applications will help them maximize
their skills. For example, Google and a
startup led by former Google employees
have developed the Nudge Engine,
which uses AI to provide personalized
suggestions to employees or managers
that enhance their effectiveness.6
For these new types of human-machine re-
lationships to succeed, organizations need
to develop effective human-machine inter-
faces that allow for seamless collaboration.
Today’s AI models tend to be “black box-
es” that are not designed for interpretabili-
ty and may therefore impede trust. Organi-
zations will need to overcome these
hurdles by developing and implementing
interfaces that provide transparency into
how AI makes recommendations, allowing
humans to understand and validate ma-
chines’ actions. Similarly, humans and algo-
rithms are rarely matched for bandwidth
and complexity. Choosing the right level of
abstraction and compression for communi-
cation between humans and computers is
critical: too much compression will sup-
press subtlety and prevent the tinkering
through which human innovation proceeds,
while too little will overwhelm human
overseers.
5
For example, Google’s DeepMind AI system
that detects eye diseases was designed to
operate in two stages — first identifying
what features of the image are associated
with eye diseases and then diagnosing dis-
eases on the basis of those features. This
structure allows doctors to see what in the
image led to each diagnosis, increasing
their trust in the system.7
The frontier of human-machine relation-
ships is still uncertain, but a few impera-
tives are emerging:
•• Segment tasks and jobs according to the
challenges they entail and deploy the
right configuration of humans and
machines against each.
•• Leverage collaborative human-machine
relationships more intensively.
•• Develop explainable algorithms that
humans can trust and understand.
Nurture Broader Ecosystems
In traditional models of production, com-
panies operated in a linear value chain to
deliver a narrow range of products. Howev-
er, economic activity is increasingly orga-
nized within ecosystems — complex, semi-
fluid networks of companies that cross
conventional industry boundaries.
Ecosystems combine information and capa-
bilities from a wide variety of players, in-
creasing their collective ability to explore
new paths and learn about the market.
They also enable the rapid development of
new offerings in response to emerging op-
portunities that could not have been fore-
seen. These benefits will be essential in fu-
ture business environments, which will
likely be more complex and less predict-
able than those of the past.
However, realizing those benefits requires a
new organizational logic. Ecosystems cannot
be successfully managed with deliberate
planning and control. Instead, organizations
need to be adaptive in order to respond to
signals that emerge from the ecosystem — for
example, by implementing internal process-
es that are flexible and responsive. And they
Boston Consulting Group • BCG Henderson Institute
need to develop shaping capabilities to indi-
rectly influence the ecosystem in more bene-
ficial directions — for example, by designing
platforms that incentivize other stakeholders
to act in certain ways.
Ecosystems are not only a new method of
developing and delivering products; they
also provide new opportunities for the
“back office” of organizations. The “gig
economy” is becoming more prominent, al-
lowing companies to leverage external,
freelance talent at scale — thereby enhanc-
ing flexibility and giving them access to a
wider variety of skills. But harnessing la-
bor-sharing platforms similarly requires in-
direct forms of management instead of tra-
ditional command-and-control techniques.
For example, the Dutch technology compa-
ny Philips orchestrates ecosystems in many
areas of its business. On the product side,
its health care division participates in eco-
systems at several stages of value cre-
ation — including an innovation ecosystem
that involves academic labs, robotics com-
panies, and startups; and a sales and ser-
vicing ecosystem based on its tele-health
app that connects many digital health care
partners. The company also created a la-
bor-sharing platform, Philips Talent Pool,
which maintains a pool of freelancers fa-
miliar with the company and monitors the
quality of their work.
By reconceiving the external and internal
workings of the organization as a flexible,
evolving ecosystem, businesses can handle
much greater dynamism and complexity.
This requires subjecting all aspects of the
organization to market forces, enabling it
to learn and adapt in response to new op-
portunities. And it requires internal sys-
tems that adjust automatically to new in-
formation, allowing learning and resource
reallocation to occur at algorithmic speed.
When combined, these capabilities can cre-
ate a “self-tuning enterprise” that constant-
ly learns and evolves according to its envi-
ronment. (See Exhibit 3.)
To harness the power of ecosystems
throughout and beyond the organization,
leaders must:
6
•• Engage external partners to create a
shared vision of the future.
•• Develop capabilities for collaboration
and information sharing at scale — for
example, platforms and APIs.
•• Redesign internal processes to be more
adaptive and data-driven, allowing the
organization to become “self-tuning.”
Rethink Management
and Leadership
Collectively, the above imperatives point to
a very different way of designing and oper-
ating organizations — which in turn will sig-
nificantly change the role of leadership. In
particular, managers and leaders will need
to focus on several new challenges.
Developing governance principles for AI
and autonomous machines. As machines
play a greater part in learning and action,
the role of leadership in setting guardrails
and priorities will take on greater impor-
tance. In the last decade, tech companies
could sidestep these topics, as the promise
and potential of new technologies gave
them a license to move fast. But as social
scrutiny of technology increases, questions
about governance, trust, and ethics are
coming to the forefront. And as AI is
Exhibit 3 | The Self-Tuning Organization Embraces Dynamism and Complexity
Marketplaces
COMPLEXITY
Experiments
Scenarios
Classical
organization
Source: BCG Henderson Institute.
Boston Consulting Group • BCG Henderson Institute
adopted more widely, all businesses will
have to deal with these difficult questions.
Some organizations are already beginning
to address them. For example, Microsoft
created a new leadership position to help
companies learn how to deploy ethical
principles, including fairness, accountabili-
ty, and transparency, when implementing
AI systems.8
Unlocking continuous human learning
capabilities. As humans increasingly focus
on higher-level thinking, they will need to
learn and practice new skills. This shift will
not be “one-shot” learning — the required
abilities will continue to evolve unpredict-
ably. Learning will therefore need to be
embedded in the workflow, and responsive
to changing needs, rather than batched at
the beginning of careers. Organizations will
also need to invest in “learning contracts”
with employees, mutually committing to
continuously develop new skills for new
roles.
Leading in ecosystems. As the scope of the
organization expands to encompass
broader ecosystems, leaders need to adopt
a new approach. Traditional “mechanistic”
approaches rely on the assumption that
organizational actions can be perfectly
Self-Tuning
organization
Digital
platforms
Algorithmic
organization
Automated
Agile organization
organization
DYNAMISM
7
planned and controlled, which is no longer
valid. Instead, leaders need to adopt a
“biological” mindset, which recognizes that
businesses are embedded in complex
systems that evolve unpredictably. This
involves managing with an experimental
approach that seeks to learn about the
environment and adapt, rather than
assuming that current knowledge is suffi-
cient. And it involves prioritizing resilience
in order to prepare for outcomes that
cannot be anticipated.
Orchestrating an adaptive organization.
Similarly, running a self-tuning enterprise
requires a different perspective on the role
of organizational leadership. Instead of
exerting control over teams and interven-
ing directly in operations, leaders should
reframe their mandate as orchestrating a
complex, dynamic system of individuals
and machines, and guiding it to productive
outcomes. This can be considered an
extension of the shift in leadership mindset
from “classical music composer/conductor”
to “improvisatory jazz group leader,” as
was presciently laid out by former BCG
CEO John Clarkeson in 1990.
As a consequence, the day-to-day activities
of managers will change. Traditional man-
agement, in the form of direct decision
making, will be reduced — b ecause fewer
aspects of the organization can actually be
“managed.” Instead, managers need to
think of themselves as coaches rather than
decision makers, and shift their activities to
higher levels, such as shaping the condi-
tions and context of the enterprise.
Boston Consulting Group • BCG Henderson Institute
T he organizations that will win the
2020s will look much different from to-
day’s: they will use different capabilities;
they will operate at different speeds and
scales of influence; they will contain differ-
ent structures and responsibilities; and they
will embody different leadership models to
enable all of the above.
Actually making the transition from here to
there will not be easy, however. In the next
installment of our series on winning the
’20s, we will expand on how leaders can
master the science of complex change to exe-
cute the necessary transformation of their
organizations.
Notes
1. T. Bresnahan, E. Brynjolfsson, and L. Hitt,
“Information Technology, Workplace Organization
and the Demand for Skilled Labor: Firm-Level
Evidence,” The Quarterly Journal of Economics, MIT
Press, 2002.
2. V. Granville, “21 data science systems used by
Amazon to operate its business,” Data Science
Central, 2015.
3. J. Pearl and D. Mackenzie, The Book of Why: The
New Science of Cause and Effect, Basic Books, 2018.
4. Kai-Fu Lee, AI Superpowers, Houghton Mifflin
Harcourt, 2018.
5. S. O’Brien, “MIT robot helps deliver babies,” CNN,
July 2016.
6. D. Wakabayashi, “Firm Led by Google Veterans
Uses A.I. to ‘Nudge’ Workers Toward Happiness,”
New York Times, December 2018.
7. J. Kahn, “Artificial Intelligence Has Some Explain-
ing to Do,” Bloomberg Businessweek, December
2018.
8. S. Castellanos, “Microsoft AI Ethicist Guides
Businesses on Responsible Algorithm Design,” Wall
Street Journal, October 2018.
8
About the Authors
Allison Bailey is a senior partner and managing director in the Boston office of Boston Consulting Group.
She is the global leader of the firm’s People & Organization practice.
You may contact her by email at bailey.allison@bcg.com.

Martin Reeves is a senior partner and managing director in BCG’s New York office and the director of
the BCG Henderson Institute.
You may follow him on Twitter @MartinKReeves and contact him by email at reeves.martin@bcg.com.

Kevin Whitaker is an economist at the BCG Henderson Institute.

You may contact him by email at whitaker.kevin@bcg.com.

Rich Hutchinson is a senior partner and managing director in BCG’s Atlanta office and the global leader
of the firm’s Marketing, Sales & Pricing practice.
You may contact him by email at hutchinson.rich@bcg.com.

The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring
and developing valuable new insights from business, technology, and science by embracing the powerful
technology of ideas. The Institute engages leaders in provocative discussion and experimentation to
expand the boundaries of business theory and practice and to translate innovative ideas from within and
beyond business. For more ideas and inspiration from the Institute, please visit https://www.bcg.com
/bcg-henderson-institute/thought-leadership-ideas.aspx.

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